{"id":113728,"date":"2026-07-18T11:31:35","date_gmt":"2026-07-18T06:01:35","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=113728"},"modified":"2026-07-18T11:31:35","modified_gmt":"2026-07-18T06:01:35","slug":"epfos-universal-pension-scheme","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/epfos-universal-pension-scheme\/","title":{"rendered":"EPFO&#8217;s Proposed Universal Pension Scheme &#8211; Explained"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><strong>Universal Pension Scheme Latest News<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Union Government is working on a new EPFO-led contributory pension scheme under the EPFO 3.0 reforms, aimed at providing a flexible, universal retirement savings framework for formal, informal, and gig workers.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Background<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India&#8217;s social security landscape is fragmented, with different retirement schemes catering to different sections of the workforce.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While organised sector employees are covered under the <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/employees-provident-fund-organisation-epfo\/\" target=\"_blank\">Employees&#8217; Provident Fund Organisation<\/a><\/strong><span style=\"font-weight: 400;\"> (EPFO) and the Employees&#8217; Pension Scheme (EPS), a large proportion of informal workers, gig workers, and higher-income employees remain outside comprehensive pension coverage.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">According to the <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/periodic-labour-force-survey\/\" target=\"_blank\">Periodic Labour Force Survey<\/a><\/strong><span style=\"font-weight: 400;\"> (PLFS), nearly 90% of India&#8217;s workforce is employed in the informal sector, many of whom lack adequate retirement security.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The implementation of the <\/span><b>Code on Social Security, 2020,<\/b><span style=\"font-weight: 400;\"> further highlighted the need to extend social security benefits to gig and platform workers for the first time.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Against this backdrop, the government has initiated EPFO 3.0 reforms, which aim to modernise the retirement system through digital infrastructure, greater flexibility, and universal coverage.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As part of these reforms, the Ministry of Labour and Employment is developing a new contributory pension scheme centred around the concept of a Target Retirement Sum (TRS).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unlike the existing <\/span><b>Employees&#8217; Pension Scheme<\/b><span style=\"font-weight: 400;\"> (EPS), which follows a defined-benefit model subject to eligibility conditions, the proposed scheme is expected to adopt a defined contribution framework, allowing individuals to build a retirement corpus through contributions from multiple sources while offering greater flexibility in retirement planning.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Proposed Target Retirement Sum (TRS) Scheme<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The proposed scheme is a defined contribution pension system under which every subscriber will maintain an individual pension account.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Instead of guaranteeing a fixed pension amount, the scheme will help members accumulate a Target Retirement Sum (TRS) based on:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Desired retirement income<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Expected retirement age<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Periodic contributions<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Investment returns<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">At the age of 60 years, the accumulated corpus may either:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Converted into an annuity based on prevailing annuity and interest rates; or\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Withdrawn through a Systematic Withdrawal Plan (SWP), depending on the member&#8217;s preference.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The scheme seeks to combine the long-term savings approach of the Employees&#8217; Provident Fund (EPF) with the pension objective of retirement planning.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Key Features of the Proposed Pension Scheme<\/strong><\/h2>\n<ul>\n<li aria-level=\"1\"><b>Defined Contribution Framework<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The proposed scheme will follow a <\/span><b>defined contribution<\/b><span style=\"font-weight: 400;\"> model, under which pension benefits will depend on the accumulated corpus rather than a pre-defined pension amount.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Contributions will be invested in <\/span><b>long-term government-backed securities<\/b><span style=\"font-weight: 400;\">, with interest credited annually to the pension account.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Target Retirement Sum (TRS)<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Each subscriber will be able to choose a <\/span><b>Target Retirement Sum<\/b><span style=\"font-weight: 400;\">, representing the desired retirement corpus.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The EPFO&#8217;s digital platform will:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Dynamically calculate the required corpus<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Estimate the contribution amount needed<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Track progress towards the target<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Allow members to revise their retirement goals over time<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">Members will have access to personalised dashboards displaying:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Total contributions<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Current corpus<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Progress towards the TRS<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Projected retirement benefits<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Multiple Sources of Contributions<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">One of the distinguishing features of the scheme is its flexible contribution model.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Contributions may come from:\u00a0<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Employees &amp; Employers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Government co-contributions for lower-income workers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Aggregators for gig and platform workers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Corporate Social Responsibility (CSR) funds<\/span><\/li>\n<li><span style=\"font-weight: 400;\">NGOs and other third-party contributors<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">This multi-source approach aims to improve retirement savings, especially for workers with irregular incomes.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Flexible Pension Withdrawal<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Unlike traditional pension systems that mandate annuity purchase, the proposed scheme will provide flexibility in retirement withdrawals.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Members may choose:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">A regular annuity<\/span><\/li>\n<li><span style=\"font-weight: 400;\">A Systematic Withdrawal Plan (SWP)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Higher withdrawals during the initial years of retirement<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Lower withdrawals to allow the remaining corpus to continue earning interest<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">This flexibility is intended to help retirees align pension pay-outs with their financial needs.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Inflation-Adjusted Retirement Planning<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The proposed digital platform will include pension simulation tools based on factors such as:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Age<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Retirement age<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Corpus size<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Interest rates<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Voluntary contributions<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Contribution frequency\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">Members will also receive <\/span><b>inflation-adjusted projections<\/b><span style=\"font-weight: 400;\">, enabling better long-term retirement planning.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Coverage of Gig and Informal Workers<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">A major objective of the scheme is to expand social security coverage beyond the organised workforce.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The proposed framework will cover:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Gig workers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Platform workers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Building and construction workers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Informal sector workers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Existing EPFO subscribers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Employees currently outside the Employees&#8217; Pension Scheme (EPS)<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">The government expects nearly 2.5 crore gig workers and construction workers to be brought under the social security net over the next five years.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">To facilitate multiple employments, the scheme will introduce a one-to-many mapping, allowing a single Universal Account Number (UAN) to be linked with multiple employers and digital platforms while maintaining separate contribution records.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Family and Survivor Benefits<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The proposal also includes a <\/span><b>Family Benefit Fund<\/b><span style=\"font-weight: 400;\">, managed on actuarial principles.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The fund is expected to provide:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Survivor pension for spouses<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Benefits for children<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Support for orphaned dependents<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">This would strengthen the social protection aspect of the pension system.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Significance of the Proposal<\/strong><\/h2>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If implemented, the proposed pension scheme could significantly strengthen India&#8217;s social security architecture by:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Expanding pension coverage to millions of informal and gig workers<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Providing greater flexibility in retirement planning<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Encouraging voluntary retirement savings<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Leveraging EPFO&#8217;s digital infrastructure for efficient service delivery<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Supporting the implementation of the <\/span><b>Code on Social Security, 2020<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Reducing old-age income insecurity among workers outside the organised sector<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The proposal also aligns with the government&#8217;s broader objective of achieving <\/span><b>universal social security coverage<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/business\/epfo-reforms-new-universal-contributory-pension-scheme-target-retirement-sum-10790779\/#:~:text=The%20government%20is%20working%20on,with%20annual%20crediting%20of%20interest.\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The government is working on a new EPFO-led universal pension scheme based on a Target Retirement Sum (TRS).<\/p>\n","protected":false},"author":21,"featured_media":113757,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[60,8766,22,59],"class_list":["post-113728","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-mains-articles","tag-universal-pension-scheme","tag-upsc-current-affairs","tag-upsc-mains-current-affairs-tag","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/113728","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=113728"}],"version-history":[{"count":2,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/113728\/revisions"}],"predecessor-version":[{"id":113741,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/113728\/revisions\/113741"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/113757"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=113728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=113728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=113728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}